Electric car rentals hampered by range anxiety

Enterprise offers Tesla Model S cars in its Exotic Car Collection fleet for about $300 to $500 a day.

NEW YORK (Bloomberg) -- Rental car drivers just aren't plugging into electric vehicles, largely because of fears the batteries will die.

In fact, people who drive off in electric vehicles from Enterprise Holdings Inc., the biggest U.S. auto renter, often bring them back to trade for a car that runs on gasoline.

"People are very keen to try it, but they will switch out of the contract part way through," Lee Broughton, head of sustainability at Enterprise, said in an interview. "Range anxiety makes them think they can't get to a charging station."

Limited range is holding up demand for electric vehicles nationwide, both in rentals and sales. About 140,000 plug-in EVs are on U.S. roads, short of President Barack Obama's goal for 1 million of the cars by 2015, data from the Electric Drive Transportation Association shows. That may slow efforts to cut pollution from transport, which is responsible for a third of U.S. carbon-dioxide emissions.

At Enterprise, customers rent the electric cars for about 1.6 days on average, compared to six days to seven days for conventional vehicles. Slow demand is the main reason the St. Louis-based company has 300 electric cars in its fleet, 40 percent below a target it set in 2010 when it ordered 500 of Nissan Motor Co.'s plug-in electric Leafs, Broughton said.

Hertz Global Holdings Inc. said in 2010 it would have 500 to 1,000 electric vehicles in its fleet by 2011, including Leafs and General Motors Co.'s Chevrolet Volt. It's fallen short of that goal because of lower-than-expected customer interest, according to Paula Rivera, a spokeswoman for the company based in Park Ridge, N.J.

'Definite interest'

"When we first launched in 2010, there was definite interest, but we fleeted according to demand," Rivera said.

Hybrids have been easier to promote because they're similar to conventional cars, Rivera said. She wouldn't say how many EVs or hybrids Hertz owns. Enterprise has 11,000 hybrids.

"The pick-up was a bit quicker because hybrids are bit easier for people to understand and range anxiety didn't exist," Rivera said.

Hertz added Tesla Motors Inc. cars at two sites, in Los Angeles and San Francisco, last month, part of its Dream Cars program that also includes Ferrari and Viper sports cars. The Teslas rent for about $500 a day. Enterprise offers Tesla Model S cars in its Exotic Car Collection fleet for about $300 to $500 a day.

That's about 10 times the price of renting a Leaf, which Enterprise offers in Orlando, Fla., for about $55 a day, the same price as other compact or standard vehicles. Prices are higher in other cities, including Los Angeles, where they are listed on the company's online reservation system at $140 a day.

Unique experience

The price for Teslas indicates that electric cars are often viewed as a unique experience rather than a vehicle suitable for everyday use, said Christopher Agnew, an analyst at MKM Holdings LLC in Stamford, Conn., said in an interview.

Rental companies are offering a small number of electric vehicles now "to keep an eye on things," Agnew said in an interview. "It's a very small part of their business."

Consumers are unlikely to show more interest in renting electric cars until they can go farther before topping up the battery, especially given the lack of public charging stations, said Enterprise's Broughton. Apart from Tesla's Model S, which has a maximum range of about 300 miles (483 kilometers), most electric vehicles run out of juice in less than 100 miles. The Leaf models in Enterprise's fleet are rated for about 75 miles.

Bigger battery

"It's fairly clear that we are going to need a bigger range battery at an affordable price at some point for EVs to take off," he said. "That's what any battery maker or manufacturer of EVs would say."

Some companies are capitalizing on increasing interest in electric vehicles like MPG Car Rental which provides only hybrid and electric vehicles at its Venice, Calif., site near Los Angeles International Airport. The company offers plug-in hybrids like the Prius Plug-In for $99 a day and the Tesla Model S for $500 a day.

Despite slower than expected growth, rental companies are moving forward with plans to buy more electric vehicles, all three rental companies said.

"Our electric vehicle fleet is definitely expanding over the next 12 months, and we will place them where demand is," said Joy Lehman, Hertz's global sustainability manager.

Consumer interest in electric cars will increase as more people have opportunities to test them, said Sam Ori, executive vice president at the Electrification Coalition, an EV trade group.

The coalition is part of a group including Walt Disney World, Travelocity, Enterprise, Nissan and others that are building an electric-car rental program in Orlando, the largest car rental market in the world fueled by 56 million visitors last year.

Enterprise has provided Nissan Leafs at Orlando International Airport and area hotels and attractions including Disney World and Universal Studios are offering charging stations. Other car models are expected to soon join the Leaf.

Said Ori: "Until you get people comfortable with this technology it won't really take off."